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Appropriators restore Department of Administration facility rates, debate Board of Investments fiduciary conversion
Summary
The committee restored higher facility-management internal service rates for the Department of Administration after a subcommittee cut; members also debated a contingent change allowing the Board of Investments to operate as a fiduciary and how that would affect rates and general fund flows.
Appropriations members returned a higher facilities management rate to the Department of Administration (DOA) and debated whether the State Board of Investments (BOI) should operate as a fiduciary fund — a structural change sponsors say would increase net returns for state revenue streams.
Rate restoration: Representative Walsh moved and the committee approved an amendment to restore the DOA facilities management rent rate to the level proposed in the executive budget. Sponsors said the blended rent rate must cover janitorial, security, building maintenance, event support, snow removal and other services the state provides for a large portfolio of state-owned and leased space. Director Misty Giles of the Department of Administration told the committee the agency’s working-capital policy requires roughly 60 days of reserves; the lower subcommittee rate would have put DOA below that threshold.
Fiduciary conversion for BOI: Committee members also addressed an amendment that restores BOI internal-service billing rates unless a companion bill is passed that would convert BOI to a fiduciary fund. BOI Director Dan Villa told the committee fiduciary status would let BOI reduce administrative pass-through fees, keep larger pools invested (avoiding parking funds at low yield), and potentially increase long-term returns that benefit pension funds and other participants. Sponsors said the fiduciary conversion would require statutory language in a companion bill; the appropriations amendment includes contingent language so the budget lines will track whether a statutory change occurs.
Why it matters: The rent-rate decision affects how much state agencies pay for facility services and the stable funding available for maintenance and operations. The BOI fiduciary discussion has broader fiscal implications because changing fund type could alter how administrative costs are allocated and how returns from permanent trusts are captured and distributed to general and special funds.
Key votes and outcomes - Amendment O.003 (restore DOA facility-management rate requested by executive): passed after debate (committee voice/roll-call reflected in committee record). - Committee discussed contingent language that would let BOI become a fiduciary if a companion statute is passed; staff and the BOI director said fiduciary status would remove certain internal service fee needs because fiduciary accounting treats participant charges differently.
Clarifying details: Director Villa explained fiduciary funds require higher legal duties but allow more of the invested pool to remain fully invested instead of being pulled into lower-yield cash for operational float; staff estimated a potential near-term general fund benefit from fiduciary conversion due to reduced pass-through charges, but it depends on statutory changes and detailed accounting.
Ending: Committee members approved the rate restoration and left contingent fiduciary language in place pending companion-bill action; staff were asked to coordinate statutory language and to provide follow-up cost estimates and implementation mechanics.
